Challenges in the evolving claims landscape

Find out how the claims landscape is changing post-pandemic, zooming in on the cyber claims market, and how insurers can adapt to the risk that businesses are facing, with insights from Derek Dow, Underwriter, Miscellaneous, Medical, and Life Sciences at Beazley,  Abigail Carter Lanford, Chief Privacy and Security Officer and Executive Vice President of Governance, Risk, and Compliance at Canada Health Infoway, Bohdahna Cherwick, Vice President and Broker Professional Services Group at Aon, and Derek May, Technology and Cyber Specialist at Hub International Insurance Brokers.

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Speaker2: [00:16:39]  Hello, everyone, and welcome to a very special edition of Insurance Business TV, brought to you with Beazley Group, one in which we are going to delve into an area with Derek Dow massive growth potential in the insurance sector, one that if you're not already thinking about, you really ought to start that being the digital health, tele health and wellness sector. It was just in March this year that Beazley issued a global survey revealing the extent of underinsurance in this area. It reached out to more than 350 from established telehealth and telemedicine companies to those in newer subsectors, including mobile health, health, software platforms and lifescience technology. It found that while there was a lot of optimism about the growth of the sector, 70% believe they are only covered for one or two of the key risks, while more than two thirds said that they lack insurance coverage for bodily injury claims arising from system failure or cyber breach.

Speaker2: [00:18:23] Indeed, 33 percent simply said they don't know what types of risk they need to be covered for. Clearly, there's a knowledge gap here. So today we're going to look at what insurance companies and brokers can do to support this fast growing area and how they can overcome what may otherwise be a complex risk landscape. So who can help navigate those complexities for us? We don't just have a good panel. We have an all star panel. I'm delighted to welcome Derek Dow. He is the underwriter for Miscellaneous Medical and Life Sciences at Beazley. Abigail Carter-Langford. She is the Chief Privacy and Security Officer and executive vice president of Governance Risk and Compliance at Canada Health Infoway. Bohdahna Cherwick, she is the vice president and Broker Professional Services Group at Aon and Derek May, technology and cyber specialist at HUB International Insurance Brokers. Thanks so much for joining everybody. Let's set the scene here.  

Tell us how the digital health and wellness sector has grown and expanded over the last 12 months, particularly, of course, in light of covid. Abigail. I'm going to start with you.

Speaker1: [00:19:40] Thank you, Paul. So Canada Health Infoway. We've got two sides to our operations on one side, we operate a national e-prescribing service. And on the other side we work with provinces, territories in Health Canada to enable the digital health technology across Canada. And as a result of that focus, we had a lot of survey work before the pandemic. And we also very actively surveyed both clinicians and Canadians during the pandemic to see how the landscape was changing and what we found was super encouraging. So what we know right now is that 92% of Canadians want technology that makes health care as convenient as other aspects of their lives with this expectation that this digital health surge will continue and be maintained. 84% of Canadians said they want to use digital tools to manage their health. And then 80% of those same folks believe that investing in technology has to be a top government priority right now. So when we start boiling that down into the reality of what did we see during the pandemic, it gave us the spike. As a country, we needed to advance digital health. So when we surveyed in 2019, only four point four percent of Canadians had ever had a virtual visit by April of 2020. So barely into the pandemic, that number had already grown to 14 and as of much more recently in 2021,

Speaker1: [00:21:05] 54% of Canadians have had a virtual visit and that could be via video, telephone, secure messaging, email, text exchange with their provider. And 64% of Canadians had at least one virtual encounter with the health care system in the past 12 months. So we've got that spike going, but the demand still hasn't been met. So demand for more and more services virtually is still exceeding use. So as an example, 80% of Canadians want to send a prescription electronically, but only 55% are actually using that modality, that functionality. There's also a high demand for traditional services to be made available virtually. So a Canadian in very high numbers, like 80% plus, wants to and expects, I should say, demands to be able to book the appointments online, see their care provider access their test results and other information. And we also see that high demand greater than 50% for emerging services that we probably wouldn't have thought of in the past as key virtual enablers like downloading apps to manage mental health in particular, is very popular, is a demand area remote monitoring of chronic health conditions. So using a watch or a phone to actually actively monitor your health and communicate with your health care provider.

Speaker1: [00:22:25] So as of April, 2021. So where do we stand now? 38% of all patients reported visits were virtual and that increases to 52% if you boil it down to family doctors. So 52% of Canadians visit with their family. Doc is being enabled virtually. And when you ask folks, what do you choose? So 32% of Canadians specifically elected to have a virtual visit when they had the option of both in-person and virtual. So that starts to give us a sense of as the lockdowns decrease, as there's more options available, there's still a high preference that 32% to take the virtual option when presented with both. And that's worth noting as well, although you can probably infer from that virtual visits get a high rate of satisfaction. patients, Canadians like them. So the other aspect to this is we're seeing an increased utilization, both of traditionally provided services your regular family doctor funded through your provincial or territorial health plan, but also increases in the receipt of that care service through a third party or a private vendor. So we're now starting to understand that when we talk about the virtual care marketplace, we're not just talking about government funded activities or even secondary payor activities, but a much broader marketplace.

Speaker2: [00:23:48] Thank you, Abigail, some fantastic stats. Are a great way to set the scene for us. Derek Dow, if I can bring you in here, how are you looking at virtual care adoption?

Speaker1: [00:23:59] Thanks, Paul, I think Abigail in the Work Canada Health Infoway has done and is doing really paints the picture for all of us of demand, both pre and post pandemic. For me, looking at it, I think it's really important to note that digital health and virtual care existed well prior to covid-19 for decades prior, in fact, with origins that date back to Canada and sort of remote telephone consultations. So digital health and the delivery of medicine virtually is not something that's been borne out of the pandemic. However, there's, of course, zero doubt that the pandemic has certainly fueled that growth as Abigail’s stats are to show. I think we're seeing that patients and perhaps people who traditionally would rely upon in person care have been forced to adopt virtual means a lot quicker. And once they do, I think they're finding they actually like it and it suits their lifestyle. And it might be the way they choose to receive services moving forward for those situations where it's appropriate. I guess in total, what that really means is you've got laggards entering the industry sooner from a patient perspective. And this demand and supply interaction, I think is really interesting. I think in Canada, anyway, we're in a situation as sort of evidenced by some of the figures Abigail referenced, where demand is really outpacing supply. And so I think the boom we're seeing already from the patient side will be mirrored and in some ways caught up on the supply side as professionals look to move into the virtual space.

Speaker2: [00:25:28] Thanks, Derek, some great points there, and if I can flick things over to Derek May now, I'd love to get your experience here as a broker.

Speaker4: [00:25:39] Thanks. Yeah, I mean, my experience would be more anecdotal, obviously, I only see what comes across my desk, but, you know, for the most part, over the last year or two, we've seen a lot of tech health startups that have been inquiring about insurance, that have been wanting to try to take their business to the next level, capitalize on some of the opportunities that Abigail mentioned. And so it is a fairly steep learning curve, though, for these tech health companies. There's a lot of things that they have to quickly get up to speed with. Some of that is education that we can provide as brokers, as underwriters. But a lot of that they're really trying to get up and running as quick as possible to capitalize on these opportunities. So it's going to be an interesting next few months and years ahead to see how that all comes to fruition.

Speaker2: [00:26:33] Thank you, Derek. So it's clear we're talking about growth here, but what I'd love to know as well is, is this growth likely to be sustained or or will it be a loss of interest as we return to a more and more normal life? Are there any risks perhaps that could derail this growth? Bohdahna? I know that you've got a lot of experience in this field.

Speaker1: [00:26:56] Thanks, Paul. Yeah, I think when we look forward into how this looks post pandemic, I don't see it necessarily derailing the growth in that area when we consider that there's going to be a whole generation of people who have come up and had to start making their own doctors appointments and everything, really only using virtual services, that's what they're used to. That's what they're going to continue to do. And I think if we look at it in comparison to how the work from home environment has has changed, what the landscape of of working is going to look like in Canada over, I guess, moving forward into perpetuum. There's a lot of people who like the accessibility and the convenience of scheduling appointments from home of being able to access what services from home. And being able to to access services that they might not necessarily have direct access to in secret. So, yes, I'm hearing static on your end of your land. You might starting your answer over. Yeah, sorry. This was still like a candy wrappers sort of unwrapped reading to your mind. How about that? Yeah, I'll restart. Thanks, Paul. I think if we look at the landscape of virtual care moving forward, I think a great comparison is looking at it in terms of how the work from home environment is going to change the working landscape in Canada moving forward. So I think there's a lot of people who really like the convenience of being able to access medical services directly from home. I think that there's also going to be a lot of growth in terms of being able to access services that they might not have been able to have access to before. And then there's just the convenience factor of not having to commute to a different part of the city or to a different city to access those services as well. So I think it might grow in a different way than it has over the pandemic. But I don't see that growth being derailed.

Speaker2: [00:28:50] Yeah, thanks, Bohdahna and Abigail, and you've already proven yourself to be the the stats lady here, so I'd love to get some some data points from you around this.

Speaker1: [00:29:00] Thanks, Paul. And the data did tell us a story on this piece, too, and give us some cautionary indicators, as you say, pitfalls, issues that we need to be aware of that could derail this. So one of the stories that our stats told us was at the start of the pandemic, you did have this wonderful surge in virtual visits. That number went quickly up. It was incredibly fast, that transition. And then we saw something that surprised us. There was this very precipitous drop off and the very fast pick up of the phone visit. So what we were seeing was folks, doctors no longer using the virtual technology and moving on to a less therapy. So not being able to have the full experience of the video, but picking up the phone. And it was an interesting one to understand what's going on there and how do we address that, because to draw that reference to Canadians, expect their health care live to look like how technology supports them and the rest of their lives. You don't see folks picking up the phone to use telephone banking at the same rate they use a simple online interface. So some of the things that we need to address there are what some of those pieces that pushed physicians off of the virtual care tools. And it was what you would expect, usability, their physicians seeking to provide care. They're not looking to provide technology support to a patient who might be struggling with an Internet connection or struggling with what the links are.

Speaker1: [00:30:28] So that drop has moderated with the phone visit continues to be a very popular virtual modality. So as we work through this transition, we clearly need to be considering usability. And that, of course, relates to security in the safety of the technologies. But my my hope and expectation is because the the demand and the appetite isn't waving at all. It's strengthening. That gives us the incentive, both as a system, as technology providers, to continue to improve and mature the products. What we're seeing that is very I think, again, helpful to move the system forward is the shift to an understanding that care is care. And that's a phrase I think we're going to start hearing more and more in this dialogue. It's not in person care and digital care with an assumption that one is of a higher quality than the other, but that care is care and should reach its same high quality standard regardless of the modality or the functionality that's driving it. So while we still need to address that usability issue, security that goes with it, we're we're starting to see and hoping to see a maturation in the market to keep users engaged and start moving to a more mature and refined use of these platforms.

Speaker2: [00:31:43] Thank you, Abigail, and the expression, though, is colourist care, but Derek Dow, if I can come to you, I guess there's still a balance to be struck here between in-person and digital.

Speaker1: [00:31:55] Thanks, Paul. Absolutely, I think there is a balance to be struck, and I think we're going to work through that and get there over time. When we're speaking with our broker partners, we always make the point clear that virtual care, digital health, it's not a replacement for in-person care. It's a bolt on. It's ancillary to it's a value and it's any of those things and more. I think what we've seen through the pandemic is sort of a rush in the interest in the growth. And over time, as we sort of settled back into his, you framed it normal life, I think we move from this sort of rush into a hybrid model and situation where people find what works for them. And it won't be the same for each and every patient either. So I think a lot of the comments that my fellow panelists have made about needing to strike that balance and that care is care, all those things ring very, very true. And they might ring more true or less true, depending on the patient. So I think flexibility will be key and I think that balance will be struck at an individual level rather than holistically for all Canadians.

Speaker2: [00:32:57] Thank you, Derek. But if I can flick things back across to you, Abigail, I suppose that there might be some people who are watching this who think, well, there was nothing wrong with the traditional approach. So tell me how you react to that.

Speaker1: [00:33:13] Thanks, Paul. And there is a a small percentage of the agents who are not interested in virtual care. Fortunately, it only amounts to 1%, but there is that one percent. We should acknowledge it. So looking broad to the other 99% there is some clarity and some consistency around what Canadians do consistently want to see as a virtual system. So I mentioned prescription renewals. So that's an obvious service that a Canadian will typically expect to see delivered now in a virtual context. Similarly, follow up for an existing health problems. So it's not a new issue. Why can't that be handled in a virtual visit, an urgent but minor health problem? So, again, taking advantage of the technology to be able to address something quickly, recognizing it's it might be more minor. So Canadians are starting to get a understanding of the technology and understanding of how it works for them and have some very clear ideas of when they expect the system to make available to them virtual care. What we need to do now is the system side of it to figure out what's that policy work that needs to happen so that there are some clearer standards in digital care to know when it's appropriate. In addition to what Canadians expect to use, when from a clinical perspective, does it make sense? And how do we measure and ensure that those quality standards are both measurable, but also that they are being met? There's also some underlying inconsistencies and challenges in the regulatory scheme that that supports this environment. Licensure as an example. So licensing of a of a physician or practitioner is provincially held and the virtual care model provides a wonderful opportunity to break down some of those provincial lines. But the clinical licensing system has to do some work to keep up so we know where the areas are that patients see the greatest value. We're starting to see the system creating a greater or stronger paradigm or framework around it. And there's some work to be done for clinicians and clinical regulators to define when it's appropriate and what is a high quality of digital care meet.

Speaker2: [00:35:29] Thanks, Abigail. And some really interesting insights there from you look down if I can bring you into the conversation. Do you think there are any pitfalls to The traditional approach?

Speaker1: [00:35:38] I think there's certainly some pitfalls to the traditional approach. I think when we say that there's nothing wrong with the traditional approach, it really comes from a place of privilege. So when we consider things like people who live in remote communities, people who work, shift work and might not have the regular hours to access regular traditional care people internationally who might not have the same expertise or the same training that might be provided to practitioners in Canada or people in Canada who might not have access to specialized services where other areas of the world have training in that area. So when we when we start to incorporate virtual care into the provision of health care in Canada, we can start to access those resources and start to deploy health care in a more efficient and more effective way that that can have a much broader reach. I think it also allows people to continue their regular life while also accessing health care. So things like remote monitoring devices that allow people to go back home where they don't have to constantly be going into a hospital or constantly going to see their doctor, who might be a specialist and not live in the same location as them. And so it allows them to continue their life more regularly, see their family and friends and have their support system around them as they go through any sort of health struggle that they are facing. And I think, lastly, it's really important to note that the adoption of virtual care doesn't necessarily mean that the traditional approach is going to be removed. What might be right for me in my health care approach and how I want to access health care might be different from the next person. And so it really allows more options and more choices for individuals.

Speaker2: [00:37:21] Thank you both. I've got to say, I love that expression, that that attitude comes from a place of privilege. Derek Dow, how do you react to that?

Speaker1: [00:37:31] Thanks, Paul. I think it's a very strong comment and one that certainly rings true to me. I think when we're looking at that traditional approach, like Bohdahna said, you really do have to compare the market and the geography you're talking about. And is digital health or virtual care helping to improve access in the first instance, or is it really providing sort of a supplemental approach to care? Well, Bohdahna also made the point that I don't think the traditional approach is being left behind in other much. Rather, we are supplementing that traditional approach and sort of improving upon it and making it better. This allows for people in rural and remote locations to have access to them. Previously, they may not have. In a similar vein, it allows people in an urban setting who may have had the ability to walk down the street to their doctor's office to now not have to take that walk or to access a doctor on their lunch break to me and look at it. It's really about a leveling of access and really creating an equal playing field for all. And that traditional approach is one that we all know and are used to and familiar with and isn't going anywhere.

Speaker2: [00:38:37] Thank you, Derek and Abigail, if I can just bring it back to you, there are some barriers, though, aren't there, to sort of making virtual care accessible for everybody?

Speaker1: [00:38:46] There are. And direct them to comments and to throw a few more stats into the mix. 4 in 10 Canadians report that their local understanding of their health information is a barrier to them using health technology. So they want to use, what, four to 10 Canadians? That's a big number are saying that they feel a knowledge gap that's impeding their ability to take advantage. And when we think of this, because Derek and Bohdahna have both talked about privilege and the opportunity for equity here, it's important to understand that those numbers and that perception of your own digital literacy, it it goes even lower. And there are even more challenges experienced by Canadians who have other socioeconomic considerations that may already be impeding their access to health care, like lower levels of education, lower levels of income, folks who live in rural remote areas. The other number I'll throw at you is the 26% of Canadians that say they don't have access to reliable Internet service, that they need to use these digital health technologies. So broadband investments by the province, by the federal government, we've seen a whole lot more money going into solving this important problem and addressing this critical barrier. But we still have a very it's not a that's not a quick fix. So to ensure that virtual care stays, that virtual care expands in an equitable way that reflects our Canadian values, these two issues need to be addressed and they need to be addressed Speaker1: [00:40:15] recognizing that those who face discrimination in the health care system today will need greater assurance that their personal health information is protected and greater assistance to actually be able to benefit. In the same way that Canadian, who has done a very aptly described as privileged, is experiencing it so that they're not further marginalized.  

One last stop. That is a bit interesting, but I think it's important that we put it in context is during the pandemic, Canadians concern about their personal, the privacy of their personal health information declined. So if you asked that question in 2019, seventy four percent of Canadians would have expressed that. 78% excuse me, would have expressed the concern about the privacy of their personal health information that went down to 74% during the pandemic. But sometimes we over respond to those numbers. So what does it mean to say. Seventy eight percent of Canadians are concerned about the privacy of their personal health information and health care? It means that they are just that concerned. They're aware they're seeing the headlines around breaches and the same risks and challenges that we're very acutely aware of in our context. But that doesn't equate directly to not using we're not wanting to use these technologies. You can be concerned about something and still see enough advantage, enough benefit to overtake that risk in your decision making.

Speaker2: [00:41:40] You know, great points. Thank you very much for that, and we've looked obviously in depth at some of the barriers to virtual care. But let's focus in on insurance now and elaborate for me on what the barriers are to take up among these businesses and how brokers can help to overcome those barriers. And and while we're at it, tell us more about the key risks that businesses face and the sort of claims that are coming through. Derek May I'm guessing cost is a big factor here.

Speaker4: [00:42:11] Thanks, Paul. Definitely cost is certainly a factor, and I think from what Abigail just said, it's a great segway into what we're just about to talk about. Privacy is really the crux of the issue here. So, as Abigail mentioned, a large majority of Canadians are worried about their data. It doesn't necessarily mean that they're not going to use these services. However, the underwriters and I'm sure that we can speak to this a little bit more, but when they are scrutinizing these risks, when these companies come to us for the insurance, we are we are helping them to piece together an application where we're sending them off to the underwriters. The underwriters are specifically looking at what could result in a breach, what could result in a claim. And one of the key issues is cyber privacy. And that that data breach risk. And what we've seen really since the start of 2021 is that there's been a massive uptick in cyber claims. And these companies who are trying to get into this space maybe aren't quite aware of how serious that risk is. And if they're collecting a whole bunch of sensitive personal information and that gets compromised, it could lead to significant fines and penalties, notification costs and the like. And so that is really driving up the cost. So one of the things that we see is, is just sticker shock. They come to get their policy and often they do it maybe a little bit late in the process. So they've got all their other ducks in a row. And then they say, oh, you know what, we need insurance. So then they come to us at the last minute and we're trying to quickly piece this quote together and we hand them the quote and boom. There's some sticker shock. They didn't budget for that accordingly. So, you know, as brokers, we really try to educate as early in the process as we can to make sure that we avoid that sticker shock when the final bill gets presented.

Speaker2: [00:44:08] Thank you, Derek and Bohdahna, I'd love to get your perspective as well, how are you guiding your clients through here?

Speaker1: [00:44:16] Thanks, Paul. As Derek alluded to, I mean, the market for cyber specifically has really shifted over the last six or seven months, so really since the start of 2021. And it's become very difficult to have those conversations with new clients and with so many so many companies being startups who are operating in the virtual care space. It's very important that network controls are really front and center to that placement process. So historically, what we've seen in the cyber market is insurance was treated as the first line of defense, really. So they had a certain level of controls, but there wasn't, from an underwriting perspective, questions asked around, are the insurers doing their full due diligence to ensure they are properly protecting their network and and preventing claims and really with some very high profile breaches that have occurred over the last year or so, it's really shown that we weren't necessarily asking the right questions in the placement process. And so it's made the underwriting process and and the process process brokers who are having that direct conversation with clients much more technical than it used to be. So really guiding the insured through what sort of controls they should have in place. And then in addition to that, so much of them having coverage is really driven by the contracts that they're entering into. And so really guiding them through, making sure they're having proper contractual language included in their contracts that they're not the contracts aren't too onerous and that they're ultimately able to place an insurance policy that's in line with a their risk, but then also be what they're contractually required to carry.

Speaker2: [00:45:51] Thank you, and Derek Dow, if I can bring you in here, is there maybe a lack of appreciation or understanding on the client side here?

Speaker1: [00:46:01] Thanks, Paul. I do think that might be a part of the issue. I mean, from our research, we did find that over 30% of leaders in the digital health space did not know what types of risks they needed coverage for in the first instance. So I think that speaks perhaps to what's being referred to as sticker shock and some of the complexities of navigating the application and determining the right coverage that different insurers in the space will need. We also found that around 40% of respondents to our research had some difficulties reading and really understanding insurance policies in the first instance as well. And I think that really gets exacerbated given the complexity of the digital health space and the different risks that these insurers face. I think what's really unique about insurers in the digital health industry is the bodily injury exposure they face that really spreads across all the different insurance agreements. While traditional policies may or may not speak to this, I think part of the complexity is finding that right coverage that is going to address that bodily injury exposure, be it on the professional liability front where you would expect to find it, but also on the Techie, as well as the cyber places where in a traditional market you may not have that coverage available and for the traditional insurance point of view, may not matter as much as it does to a digital health insurer.

Speaker1: [00:47:18] For these reasons, I suggest in navigating the complexity, finding a package policy is really paramount, one that blends these different coverages together while at the same time providing that bodily injury coverage for us here. Obviously, I mean, the professional liability will always be the heart of our virtual care policy. Different insurers will face varying degrees of that professional liability exposure, and that depends largely on the insurance business and if they're an app developer versus telemedicine provider. But even those insurance whose business is really simple in nature can be very high from an exposure point of view at the records, be it the care they're providing via the connecting of patients to providers. All of these things can lead to exposure that will, on the face of it, it may be a smaller app developer or may have a small revenue run rate in the first year. But when you look at the actual aggregated exposure, it can be quite large and it can sort of spread across all those different insurance agreements.

Speaker2: [00:48:14] Thank you, Derek and Abigail, if I can come back to you as well, I mean, is enough due diligence being done here?

Speaker1: [00:48:22] So not yet. So if you think about, again, the scenario we found ourselves in as a health sector, the pandemic came along very quickly and required to move into new technologies at a pace that is extraordinarily untypical in the health care system. They don't move that quickly. And that's typically because there's usually a lot of upfront due diligence that couldn't happen here. We went from being available to serve patients in person one day to not having that opportunity the next. And it's clinical care. You needed to be able to respond. So now what we're seeing is the health care sector having that moment, that deep breath and experiencing some of that anxiety as the buyers of these technologies, not just the makers, but the buyers to say, did we pick the right partners? Because there is always, as Derek noted, a heightened understanding that security is not just security. When you're dealing in health care, information security is a safety issue. So now we're looking and seeing that province's regional health authorities, even smaller health care providers, are taking a fresh look at the due diligence they conducted when they brought on a virtual care partner or introduced a virtual care solution to their patients or clients and understanding and considering how they'll manage those partners in the long term as a long term vendor partners.

Speaker2: [00:49:42] Yeah, fantastic points, Abigail, and my huge thanks to you, to Derek and to Derek, as well as to Bohdahna for some brilliant insights today, my huge thanks to Beazley as well for helping bring this panel together. And I know what you're thinking. We've just scratched the surface here, right? Well, Fear not, we're going to be back with exactly the same panel to delve into issues like the claims landscape and how brokers can get business from these clients. So stay tuned and we'll all see you next time here on Insurance Business TV.  


Speaker2: [00:52:07]  

Hello, everyone, and welcome to Insurance Business TV, and you may remember that just a short time ago in association with Beazley, we brought you an all star panel to delve into the areas of digital health, tele health and wellness. That panel looked at how the sector is grown and the barriers facing insurers and brokers as they look to offer coverage for this exciting new segment. But today we're bringing that same panel back for part two. We realized we only scratched the surface, so we thought, let's be nice and let's do this twice. But now let's dive deep into the segments of the market, how it's changing post pandemic and how insurers and brokers can help their clients tackle those risks. So it is with great pleasure that I introduce you one more time to our panel. They are Derek Dow, Underwriter Miscellaneous Medical and Life Sciences at Beazley, Abigail Carter Langford, chief privacy and security officer and Executive Vice President of Governance Risk and Compliance at Canada Health Infoway. Bohdahna Cherick, Vice President and Broca Professional Services Group at Aon and Derek May Technology and Cyber Specialist at Hub International Insurance Brokers. So let's look at the claims landscape and how that's likely to change post pandemic. Derrick Dow, can you set the scene for us here?

Speaker1: [00:54:20] Sure, thanks, Paul. I think as we continue to see accelerated and prolific use, I think naturally in some ways that's going to lead to greater claims frequency, certainly for hours from our side as the insurer in the space, we expect that to be the case to some degree. I think we've seen perhaps some delay due to the pandemic and in various geographies, court systems being put on hold for some periods and longer periods and others. I think one thing I'd really note here that's important as a takeaway or as something we can all keep in mind is that the claims in this space aren't necessarily new. Their claims that we have seen in the past and we'll continue to see how they come about, however, might be different. And I think post pandemic, we're really going to start to see more of that. And what I mean by that is sort of we're looking at digital health. What is the standard of care from a digital health point of view compared to in person? There's this concept of sort of website manor, which is, of course, similar to bedside manner and a play on words. What does that look like for practitioners and physicians in the space? Seeing patients virtually? And another thing that I think we have to keep top of mind is our digital appointments always appropriate? Are there instances where a digital appointment needs to be stopped and in-person care replacing that digital visit? These are all things that I think post pandemic. As we see greater use, we're going to start to see these develop from acclaims front, not necessarily suggesting each or any of these are claims, but just something that I think we all need to keep in mind, that along with, of course, the bodily injury exposure that is present for these insureds and how that's going to materialise itself from claims on the various insurance agreements.

Speaker2: [00:56:02] Yeah, thank you, Derek. And if I can bring the other Derek into it now, Derek May, I'm assuming that you would want to focus in on the cyber claims market here.

Speaker4: [00:56:12] Thanks, Paul. Absolutely. The cyber market has dramatically shifted in the last year since since covid took over. We've seen a rapid increase in cyber claims, mostly focused in with ransomware type losses. And since about January 1, 2021, the insurance marketplace has dramatically changed. The underwriters are taking a fresh look at all of these cyber policies that they put on the books the last number of years and are heavily scrutinizing risks moving forward to the to the point where some are actually issuing non-renewal notices if you don't have security up to their standards in place. And so it's been a dramatic shift for brokers to educate our clients on what they need to have in place to be able to just keep coverage in place. Usually Abigail's the stats person, but maybe also some stats for you on the cyber losses. So at points in 2021, OSFI reported that the cyber loss ratio hit nearly 500%, meaning that for every dollar that the insurers were bringing in in premiums, they were paying five in losses. And so just to repeat that, one in premium and five in losses, it's not a very good way to run a business. So you can imagine that, you know, like I said, post January one of 2021, they've really ramped up what is required in this space from an underwriting perspective. So we're now seeing network scans. We're seeing increased questions, especially around ransomware and the scrutinize. It'll be scrutinized certainly well into the future, I'm sure, as this trend continues.

Speaker2: [00:57:57] Thank you, Derek and Derek Dow, if I can just move you back into the conversation, if you don't mind, because I'm imagining that a cyber event can impact on a lot of other areas as well.

Speaker1: [00:58:09] Thanks, Paul. It absolutely can for digital health insurance. It's no surprise, and we've talked at length about it today, that security of information underpins the vast majority of these risks. But beyond just the private information, from a cyber point of view, there's other things that I think we need to be very mindful of. As an example, I'm thinking of an implantable device that's controlled remotely. I think listeners will have in recent days and weeks heard examples of bad actors being able to take possession of physical assets and shut them off or run them in a way that they weren't necessarily designed for. The medical space is not immune from attacks like this. And I think it's something we need to be very aware of and sort of goes back to that bodily injury exposure. I keep bringing up it's there across all the different areas of the business and cyber is no different. So beyond just the information, I think we need to be very mindful of the fact that a cyber attack can leak into other areas of the organization, including, in fact, the very operation and how those devices in this example are controlled. And those ramifications can be serious. It might be minor if we're talking only about a monitoring device, but if we're talking about a life sustaining implantable or something is delivering medicine at certain certain intervals and certain rates, I don't think I need to continue to paint the picture of what can happen. So absolutely something to be mindful of.

Speaker2: [00:59:32] Thank you, Derek. And when we're talking about ramifications, of course, Bohdahna, there's got to be higher potential for class action suits here as well.

Speaker1: [00:59:42] Thanks, Paul. Absolutely. So, I mean, while there continues to be developed one on one, because it's hosted in a way that is much broader and has much wider resource or is on a much wider platform, really, it has a potential for four large class action lawsuits. So if we if we go back to what Derrick was saying around having implantable devices previously, you might have, let's say, some sort of operation and some sort of implant put in you, but it might not have been connected to anything. Now, if it is connected or remotely monitored and there is the ability for somebody to access your implantable device. There is the ability to access everybody else who has the same implantable device and therefore the potential for large class action lawsuits just by nature of. A number of patients being or accessing service at the same platform, the same network.

Speaker2: [01:00:33] Thanks, Bohdahna,. So clearly, there's a mountain of risks here, so how can insurers adapt to the risk that these businesses are facing? So, I mean, I guess what I'm asking you here is, what are they currently doing right and work? And they improve their doubt. Derek Dow, You're with an insurer. So what's your key message here?

Speaker1: [01:00:54] Thanks, Paul. I think as a start and probably the key message really is that gone are the days of one size fits all. I think these insurance warrant specifically tailored policies and coverage solutions that really fits their business. I think we can agree that a vast majority of digital health insurers will face very similar exposures. But where this is going to varies in the degree and frankly, the severity as well. On the one hand, you may have a telemedicine provider. So a physician who provides remote care to, let's say, people in rural areas who don't have access to in-person care. So they're going to have a very high degree or a higher degree of professional liability exposure because they're really delivering the care in the first instance. On the other side, you may have an entity that builds and supports platforms that connects those patients and the professionals, perhaps the professional in that very example, their exposure is more focused on the techie and the cyber because they're not the ones delivering care, but really enabling that care to be delivered. Now, not to twist my words, but I'm not trying to imply that the platform developer doesn't have that professional liability exposure. They probably do just to a lesser degree. And to say that those two example insurers can have the same policy, I think we can all agree, just doesn't make sense. I think we need to be able to address this. And through our virtual care policy, we're able to tailor limits and coverages to the insurers to make sure that we're covering those exposures, inadequate amounts where they exist and where they don't. There's no requirement that the coverage be included or to the same degree. So I think really it's about understanding the risks, understanding exposure in the insurers and making sure we're really building that coverage to fit those insurers.

Speaker2: [01:02:32] Thank you, Derek. That's clearly a great approach. But I think if we want to find out how an insurer needs to improve, then we need to ask a broker. So, Bohdahna, over to you.

Speaker1: [01:02:45] Thanks, Paul. So, I mean, I completely agree with Derek and that the tailored approach and having a tailored product specifically constructed in a way that you can have a building block policy where you can tailor that product. Exactly for what that particular insurer needs is the ideal approach. Unfortunately, it's been a slow adoption from insurers. So currently there are very few insurers who are able to offer a packaged policy that encompasses all of the different liability coverages that any sort of telemedicine or e-health company might face. And so I think one of the primary things, if an insurance company does want to potentially look at writing this business without a tailored product is to have a certain level of flexibility with how their existing products are structured. So traditionally, what we would see with insurance companies is there would be a health care department and that would focus on the medical malpractice, professional liability, piece of the exposure. And then you would have a cyber tech department that would focus on the cyber risk and the technology areas and admissions risk. So part of the issue around that is traditionally attack in a cyber policy is not going to cover any sort of bodily injury exposure. And as Derek alluded to a number of times, that's really paramount to what the exposure is for these sorts of companies. So there needs to be a level of flexibility in terms of being able to tailor what their existing policy structure looks like and being able to tailor exclusions within that policy to fit what the exposure for this client is.

Speaker1: [01:04:14] Additionally, what we're seeing is struggles with placing limits that are adequate for either the client's exposure or for any sort of contractual obligations. So obviously, with the way the cyber market is developing, there's a lot of companies that aren't able to offer a full 10 million that might be required from an insurer based on the contract that they're entering into. And so we're needing to look at access. Unfortunately, if we place a primary on a product such as Beazleys, where everything is all under one policy, it is a struggle to place access because you need an access policy over top of the medical malpractice piece and you also need it over top of the cyber and tech. Now, with those two with any access ensure having different departments, it's very difficult to place that in a way that is cost effective or is appropriate and ensures that there is no potential gaps in between the tech access and the cyber access and the medical malpractice access. And so I think just further development in terms of how insurance companies are going to approach this risk, especially as it is emerging so quickly, is going to be really key to the insurance industry being able to write this type of business.

Speaker2: [01:05:22] Thank you, Bohdahna. That's a great rundown for us there. And while we're on the subject, I'd love to ask the panel what tips they have for brokers who who want to get business from digital health companies. And and what should brokers be looking for in a good policy for these clients. So, Derek May, why don't you give us your thoughts on this one?

Speaker4: [01:05:44] Thanks, Paul. Yeah, certainly, as far as the other panelists mentioned, having a modular type policy that can fit the needs of all of what the client is looking for is going to be essential. So trying to have all of the coverages with one carrier that prevents gaps from occurring between the different coverages. And I think, you know, whenever we have again, in my in my opinion, a lot of tech startups are coming across my desk. What I like to do is really try to break it down again as early in the process as possible, walk through what can be a fairly lengthy application, especially on these modular policies where you're trying to include all of these different lines of coverage. There's certainly going to be a lot of the questions coming from each and every section. So walking the client through each and every section, sort of holding their hand through that process and potentially even engaging the underwriter to come on that phone call with the client, really to break down those barriers, make it is as personal as possible, because sometimes when you put a fairly lengthy application in front of a client, they sort of get intimidated and scared away. And that really stunts the process. So making sure that you make the process as easy as possible on these clients, I think goes a long way at the end of the day.

Speaker2: [01:06:59] Thank you, Derek and Abigail, some great points from Derek there about making things as personal as possible, but I'm guessing that there's going to be a lot of heightened anxiety here that the brokers are going to have to deal with with their clients.

Speaker1: [01:07:13] It's hit the nail on the head. I'm really happy to follow Derek on this because from a client perspective, he is absolutely describing what organizations like mine and are experiencing right now. So heightened anxiety. Absolutely. But that's not within a small quadrant of the organization or as an organization having formal conversations about these types of risks. Our insurance profile, both with our partners outside the organization, with our board, with our senior leadership team than ever before. And it's coming because this is such an area of change. It's coming with a very high learning curve. So I'll speak for myself. I'm going to be far more cognizant about insurance, insurance products, but also the underlying rules that are in expectation. So that puts the broker in a position of being able to provide a far greater value than just the insurance, but also the education around it to be a coach in trying to get our heads around what's going on in the industry and also moderating some of that anxiety with the more concrete understanding of risk response.

Speaker2: [01:08:23] Thank you, Abigail. And, of course, it's very, very clear that brokers have got a lot of educating to do here, but maybe brokers need to educate themselves as well, Bohdahna

Speaker1: [01:08:40] Thank you, Paul. I think if we look at the way that the industry has historically been set up and who would be handling a cyber policy versus who would be handling a medical malpractice or professional liability policy would traditionally be two different teams entirely. And so what we're needing to do is educate ourselves in the space and on top of that, educate ourselves in terms of where the emerging risks are, how to have those conversations that Abigail was talking about and in general saying on top of the trends in the industry. So when we look at the structure of the liability exposures for these sorts of clients, we see on one hand the health care exposure, which is very much an established line of coverage in the insurance industry, has been around for a very long time. And there's a lot of claims information and a lot of historical data that we can rely on. But it's also a very heavily regulated industry. And as we see virtual care and telemedicine continuing to grow, there's going to be changes and an evolution of the regulatory environment that we need to be aware of. And then, on the other hand, we have fairly new exposure based in line of coverage in the insurance industry of the cyber and technology exposure. So that's constantly changing. The claims trends on that front are very much front of mind for everybody, given recent news events and really having a grasp of how those two worlds interplay when talking about this type of exposure is going to be extremely important for brokers to be able to discuss with their clients.

Speaker2: [01:10:19] Thank you Bohdahna. What we’re talking about important Derek Dow, it's going to be vital to have a really strong insurance partner here as well.

Speaker1: [01:10:28] Thanks, Paul. Certainly, I think so, and for me, one of the key things here is really that three way relationship. So that being the insurer, the broker and the insured, I think in a space that's emerging and growing and to all the other comments made by my fellow panelists, just about the constant change, I think that relationship is probably needed now more than ever in the space that we're working through these issues together. I really liked what they said about forming that bond early on with insurers and bringing the insurer into that discussion to go through the application, which we can use as sort of a risk management tool. I think that's invaluable and definitely a way to help build that relationship from day one so that we're all ready to sort of face the challenges of the industry as it continues to grow and evolve.

Speaker2: [01:11:13] Thank you, Derek, and everyone. You've been a great panel. My huge thanks to you. But finally, if you will leave us with a takeaway here, a thought or a tip that you hope that brokers or the insurance profession at large will carry forward about the digital health space. On the back of this conversation, Derek May get the ball rolling for us.


Speaker4: [01:11:36] Thanks, I think for me, the biggest thing is the devil's in the details, you know, as brokers every day we're lining up quotes for our insurers to consider you quite often. What is an insurer? Do they go right to the bottom line, look at the price and they choose the quote based on price. And we really need to steer away from that, especially in this ever evolving space, because as has been alluded earlier in this in this roundtable, not all policies are equal. And so you can't just look at the price and make a decision. You have to compare them apples to apples, educate the clients on why one might be better, why one might justifiably be more expensive than the other, and make sure again that we're just educating accordingly.

Speaker2: [01:12:23] Thank you, Derek. Great message. Not all policies are equal. Abigail, what's your takeaway?

Speaker1: [01:12:30] My takeaway is to reiterate some of the words we've used in this last part of the conversation from a client perspective, you the folks on this call are our most critical partners. So my broker, my insurer, they are unbelievably essential to the operation of my business and my knowledge of it from a risk perspective. So if you can help foster those relationships, be open to perhaps a different type of relationship with your clients and more open and close relationship with a whole lot of dialogue from a client perspective, that's enormously helpful and valuable. We regard the application process and we try very hard to regard the application process not as a torture device, but an opportunity for us as an organization to better understand our risk profile. And that's a service you can provide more broadly as brokers and as insurers to the marketplace, because it's been a huge amount of change in a very short amount of time. And what needs to happen to sustain that change is some rapid maturation, a better understanding of what the standards are and the knowledge to rise up to those standards throughout the market. So from my perspective, when we're talking about how do we support and advance digital health care in Canada, insurers and brokers have gone from perhaps being an ancillary participant to a critical part of the puzzle to making this work for Canadians.

Speaker2: [01:13:53] Thank you, Abigail, and not a torture device may be the quote of the day, Bohdahna, how do you follow that?

Speaker1: [01:14:01] Thanks, Paul, I'm not sure I can follow that, but I guess but my primary takeaway, it's really that this it needs to be a dialogue. I mean, much like Derek Dow had alluded to, there are three parties involved in this. And open conversation is key to having a proper replacement that's going to properly address the insurance risk. Really, it is not a one size fits all approach. And that dialogue is key to understanding what you are placing as a broker or as an underwriter, understanding what you're writing and as a client, understanding what's being placed and having your voice heard as well. So, you know, really communicating where you feel your key risks are in ensuring that the policy is properly addressing those and not just allowing an off the shelf product to be placed just to say that it's place and check the box.

Speaker2: [01:14:46] Thank you, Bohdahna. We're three for three on great points here, Derek Dow. No pressure but over to you.

Speaker1: [01:14:55] Thanks, but no pressure at all. You know, it's been such an interesting and engaging conversation, I wish it can all sort of be the take away. But if I had to sort of boil it down to one thing, if I look at our research, we found that over 94% of respondents were expecting growth in 2021. And to me, that just highlights the opportunity for us in the insurance industry that brokers the insurers. These are this is an industry that I think is booming and is only going to continue to boom. And I think it is provides us with a massive opportunity to be there to serve the industry. I think it requires dedication as we sort of for all the reasons we've discussed and the right insurer partner and somewhat the right broker, I think more important than ever, we need to make sure that we're being clever and proactive in the way that we're engaging with these insurers and from my side with our brokers as well, to provide education, to provide the support, to go after this business. The need to understand the insurance business is probably also never been higher. And it's clear to us, I think, based on all the comments today, that digital health is really it's here to stay. So it's important that we as the insurance industry look to grow with the industry and do our best to really stay in the forefront of innovation and coverage solutions.

Speaker2: [01:16:09] Thank you so much, Derek, a great positive vibe to finish on. Thank you to both Derek as well. It's of Bohdahna and to Abigail, truly brilliant panel. I think the key message for me from all of your insights today is that clearly the market needs to understand more about the attitudes and the concerns that exist in this area. But now really is the time to start building that understanding and then building those relationships. Many thanks. Once more to Beazley. I think this has been a terrific episode and I hope you do to take care, everybody, and join us again next time here on Insurance Business TV. All right, folks, I think we're done.